At R109, Is NEPI Rockcastle N.V. (JSE:NRP) Worth Looking At Closely?

NEPI Rockcastle N.V. (JSE:NRP), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the JSE over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on NEPI Rockcastle’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for NEPI Rockcastle

Is NEPI Rockcastle Still Cheap?

According to my valuation model, NEPI Rockcastle seems to be fairly priced at around 8.8% below my intrinsic value, which means if you buy NEPI Rockcastle today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth ZAR119.24, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, NEPI Rockcastle’s low beta implies that the stock is less volatile than the wider market.

What kind of growth will NEPI Rockcastle generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of NEPI Rockcastle, it is expected to deliver a negative revenue growth of -20% over the next couple of years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? NRP seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on NRP for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on NRP should the price fluctuate below its true value.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For instance, we've identified 2 warning signs for NEPI Rockcastle (1 is significant) you should be familiar with.

If you are no longer interested in NEPI Rockcastle, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.